Motor vehicle insurers have welcomed a NSW Supreme Court ruling that may alleviate rising premium pressures from credit hire companies.

In Nguyen v Cassim, credit hire company Right2Drive provided a hire car to Azad Cassim after his BMW sedan was involved in an accident with a vehicle driven by Dylan Nguyen, who was found to be at fault. Such companies promise the at-fault driver’s insurer will later cover the cost of the car hire.

Right2Drive charged Mr Nguyen’s insurer a rate of $204 per day for a Nissan Infiniti over 84 days, for a total cost of more than $17,000. This was alleged to be well above the market rate.

Mr Nguyen’s insurer appealed a NSW Local Court decision to grant the full amount to Mr Cassim. The Supreme Court found that a test for a claim of damages is one of need, not actual financial loss, and scrapped the previous orders, awarding $7476 to Mr Cassim instead.

Suncorp, which owns motor insurance brands AAMI, Bingle and GIO, says the ruling “supports our long-held belief that some credit hire companies do not accurately communicate with their customers and charge well over the usual market rate for hire cars”.

“Our focus is on delivering the best experience for our customers throughout the claim and repair process, while keeping motor insurance as affordable as possible,” a spokesman said.

IAG Executive Manager Short Tail Claims Luke Gallagher says it introduced free hire cars for its NRMA Insurance and RACV Insurance customers who are the not-at-fault driver to reduce its claims costs and improve its customer experience.

An Insurance Council spokesman told insuranceNEWS.com.au that exorbitant replacement vehicle claims have put pressure on the cost of motor vehicle insurance in recent years.

“The decision that need and inconvenience should be the ultimate consideration when determining recoverable replacement vehicle costs may help alleviate premium cost pressures.”